Silver and gold prices rise highest over the past decade

Silver has been the best performing commodity over the past decade, according to research by the Lloyds TSB Private Banking Commodities Monitor. Between 2002 and 2012, silver prices have risen by 572%, significantly greater than any of the other commodities tracked. In addition to being perceived as a safe haven investment, high demand for industrial uses has also contributed to the strong rise in the price of silver.

Three quarters of the commodities tracked have more than doubled in value

15 of the 20 commodities tracked have at least doubled in value since 2002. Gold, at 428%, saw the second highest increase, followed by tin (414%), copper (406%) and lead (344%). Demand for gold from developing countries and investors looking to safeguard the value of their investments against a backdrop of economic uncertainty, rising oil prices and a weak US dollar has helped to sustain the price of gold at a high level.

Commodity prices have risen by over 160% since 2002

Commodity prices, in general, have risen by 161%1 over the past decade. In contrast, this is more than four and a half times the return from UK equities2 (35%) over the same period. The strong rise in commodity prices over the last ten years partly reflects strong demand from emerging economies and the relatively weak US dollar.

At a sector level3 (i.e. precious metals, base metals, energy and agriculture), precious metals has been the best performing sector, rising by 358% since 2002. Energy prices, at 268%, were the second highest performing sector.  

Commodity prices down by 13% over the last 12 months

In contrast to the performance of the past decade as a whole, commodity prices have declined by 13% over the past year, reflecting the considerable uncertainty regarding the global economic outlook. At a sector level, precious and base metals have seen the biggest falls (both -19%), while the energy sector recorded the only increase (3%).

Ashish Misra, Head of Investments at Lloyds TSB Private Banking, commented: "Commodity prices have risen significantly over the past decade, partly reflecting strong demand from emerging markets over the period. Precious metals were the best performing commodity, with their perceived position as a safe haven investment reinforced over recent years amid the financial market turmoil. However, with continued global economic uncertainty, commodity prices have weakened somewhat over the past year.

"Looking forward, commodity prices are likely to be driven by the level of demand from emerging economies such as China and India."

Soya beans have seen the biggest increase in value over the past year whilst coffee prices have fallen sharply.

Just six of the 20 commodities tracked have increased in value over the last 12 months. Soya beans were the top performing commodity over the past year with a price rise of 24%. Supply side concerns, particularly in the US, have helped push up soya bean prices.

Wheat (soft red), at 19%, recorded the second biggest increase, followed by corn and crude oil (both 7%).

In contrast, coffee prices (-41%) have almost halved over the past year as altering demand-supply conditions have helped to weaken prices.